Higher Highs and Lower Lows: The Role of Corporate Social Responsibility in CEO Dismissal

Strategic Management Journal, Vol. 38, No. 11, 2017

Posted: 4 Oct 2017

See all articles by Timothy Hubbard

Timothy Hubbard

University of Notre Dame - Department of Management & Administration Sciences

Dane M. Christensen

University of Oregon

Scott D. Graffin

University of Georgia - Department of Management

Date Written: March 20, 2017

Abstract

Investing a firm’s resources in corporate social responsibility (CSR) initiatives remains a contentious issue. While research suggests firm financial performance is the primary driver of CEO dismissal, we propose that CSR will provide important additional context when interpreting a firm’s financial performance. Consistent with this prediction, our results suggest that past CSR decisions amplify the negative relationship between financial performance and CEO dismissal. Specifically, we find that greater prior investments in CSR appear to expose CEOs of firms with poor financial performance to a greater risk of dismissal. In contrast, greater past investments in CSR appear to help shield CEOs of firms with good financial performance from dismissal. These findings provide novel insight into how CEOs’ career outcomes may be affected by earlier CSR decisions.

Keywords: CEO dismissal, corporate social responsibility, financial performance, panel regression, stakeholders

Suggested Citation

Hubbard, Timothy and Christensen, Dane M. and Graffin, Scott D., Higher Highs and Lower Lows: The Role of Corporate Social Responsibility in CEO Dismissal (March 20, 2017). Strategic Management Journal, Vol. 38, No. 11, 2017, Available at SSRN: https://ssrn.com/abstract=3046749

Timothy Hubbard (Contact Author)

University of Notre Dame - Department of Management & Administration Sciences ( email )

Notre Dame, IN 46556-0399
United States

Dane M. Christensen

University of Oregon ( email )

1280 University of Oregon
Eugene, OR 97403
United States

Scott D. Graffin

University of Georgia - Department of Management ( email )

United States

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